Economist discovers what a free river is worth

If the two aging dams on the Elwha River in Washington state come tumbling down, salmon will return to 70 miles of the river for the first time since 1911.

What's that worth in dollars and cents? You can't put a price tag on Mother Earth - or can you?

John Loomis, an economist at Colorado State University in Fort Collins, quantifies such intangibles. His estimate of the Elwha River-restoration project's "nonmarket" benefits: $3.5 billion a year.

That's how much the American public appears willing to pay to restore the Elwha ecosystem and to know that future generations may enjoy a free-flowing river, according to Loomis' recent study contained in the first of two environmental impact statements on the river.

The first EIS, issued July 27, says removing the Elwha River and Glines Canyon dams is the best way to restore the Elwha's once-legendary salmon runs; 85 percent of 600 comments on the EIS called for dam demolition. A second EIS, due out next spring, will address mechanisms for taking out the dams.

Environmental conflicts often pit commodities with monetary value - timber, oil, hydroelectric power - against things that aren't bought and sold in the marketplace - wildlife, scenery, ecological balance. But there's no yardstick, no obvious basis for comparison.

Loomis and other economists combine public-opinion research and statistical analysis to reduce such conflicts to a common denominator. They translate the values people associate with a quality environment into cold, hard cash. What they do is called "contingent valuation," and it's more than an academic exercise.

It was used to help calculate damages to Prince William Sound after the Exxon Valdez ran aground. It played a role in the Interior Department's decision to reintroduce endangered gray wolves to Yellowstone National Park and central Idaho.

It could keep removal of the Elwha dams afloat. With estimated project costs at around $100 million, Shawn Cantrell of Friends of the Earth worries that as more money is needed, sticker shock will set in. Congress allocated $6.6 million for the project for fiscal year "96, but at least $25 million will be needed annually for the next three years, says Cantrell. So far, he's "cautiously optimistic" that Congress won't cut funding and effectively halt the project.

Never in U.S. history has a dam been torn down for environmental reasons. If the Elwha River projects survive budget cuts, they could be the first.

The two dams generate a small amount of power and it all goes to just one customer, a Port Angeles pulp mill.

Built without fish ladders, the dams block all but five miles of the Elwha to salmon. The habitat above the projects, in Olympic National Park, is among the most pristine in the country.

In 1992, Congress authorized the Interior Department to buy the dams and remove them, provided the agency first determined demolition was the best way to restore the Elwha's salmon runs.

Endorsed by Interior Secretary Bruce Babbitt in 1993, the project has support from environmentalists, the pulp mill, the dams' owner, the Lower Elwha S'Klallam Tribe and federal agencies.

Contingent-valuation studies don't enjoy universal acceptance among economists. Still, Loomis' study could become a weapon for environmentalists in the unfriendly world they now face in Washington, D.C. In almost every case, economists say, contingent-valuation studies have shown people place a high dollar value on preserving or restoring the environment, a value that easily surpasses the costs.

Based on surveys sent to 2,100 randomly selected households in Clallam County, where the dams are located, as well as the rest of Washington and the nation, Loomis found that people were willing to pay from $3 to $190 per household yearly to tear down the dams and restore salmon runs.

The U.S. House of Representatives recently passed legislation that requires rigorous cost-benefit analysis before new environmental regulations are adopted. "They may be opening a Pandora's box and not knowing it," Loomis says. "If they were aware people come up with values of $60 or $70 per household to remove dams, or $20 or $30 to reintroduce wolves, Newt (Gingrich) and the gang would go, "No, no, no!" "

Though studies such as Loomis' reinforce the belief that the public is on their side, environmentalists also find something troubling about reducing the value of a river or a forest to legal tender.

"At one level I like what John's done," says Cantrell. But studies such as Loomis' also suggest the Earth is for sale, he says.

Jack Knetsch, an economist at British Columbia's Simon Fraser University says another problem with contingent-valuation is that people often aren't willing to pay the money they promise in surveys.

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